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Yes Bank gained over 3 percent intraday on Friday as investors could have cheered its performance for the December quarter.
The company reported profit growth of 22 percent despite sharp jump in provisions for bad loans, driven by non-interest income, NII and operating income. Profit for the quarter increased to Rs 1,076.87 crore from Rs 882.63 crore in year-ago, which was in line with estimates.
Net interest income, the difference between interest earned and interest expended, grew by 27 percent year-on-year to Rs 1,888.8 crore for quarter ended December 2017, which missed estimates.
The bank saw robust growth in loan as well as deposits growth.
Brokerages have largely maintained their positive stance and were upbeat on the asset quality. Having said that, lower net interest margins was a cause for discomfort, they added.
Brokerage: Nomura | Rating: Buy | Target: Rs 375
Nomura observed that asset quality was relatively stable in q3. Further, no slippages from large pool of upgrades was done in Q2. It said that the key would be Q4 slippages as the company intends to avoid large divergence in FY18.
Brokerage: Deutsche Bank | Rating: Buy | Target: Rs 400
The bank said that loan growth comes at the cost of NIMs and a drop in the latter is discomforting.
Brokerage: CLSA | Rating: buy | Target: Raised to Rs 410
The brokerage sees 25% PAT CAGR over FY17-20. Further, it said that it missed estimates due to weaker NII & higher provisions. In fact, normalization of slippage is positive. Asset growth of 36% was back-ended & will lift NII in Q4.
Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 450
The global research firm believes that Q3 miss was driven by lower-than-expected net interest income and higher provisions, partially offset by higher non-interest income.
Brokerage: Citi | Rating: Buy | Target: Rs 400
Citi said that the bank had strong growth, but margin and asset quality miss. Meanwhile, CASA and fee momentum continue with gains in retail lending franchise. Slippages and credit costs remained relatively elevated.
The stock has gained over 10 percent in the past one month, while its three-day gain stood at 3 percent. At 11:35 hrs Yes Bank was quoting at Rs 343.45, up Rs 3.20, or 0.94 percent, on the BSE. It touched an intraday high of Rs 352.00 and an intraday low of Rs 342.00.
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